This past year was one of the worst ever for large mining companies, which suffered because of falling commodity prices and high leverage. They needed cash badly, and the streaming companies were more than happy to provide it. Mining giants such as Barrick Gold Corp., Glencore Plc, Teck Resources Ltd. and Vale SA all sold streams in 2015.

For junior or producing gold companies and their investors, the range of forecasts and continued volatility suggest it’s wiser to ignore the crystal balls for now and instead focus on what companies can control, like ensuring a sound business plan, keeping their balance sheets strong, monitoring costs, and building value for their shareholders.

Trends are against gold:

1) no inflation can be detected

2) rising interest rates offer a money making alternative while we watch and wait

This is the time of year when analysts roll out their economic forecasts for the New Year. For those who keep a close eye on gold prices, this can be a painful process.

It’s been another tough 12 months for the yellow metal, with prices falling for the third consecutive year — down about 10 per cent in 2015 alone. Prices touched a high in the neighbourhood of $1,300 and, as the year drew to close, they neared six-year lows around $1050.

That’s a big dive from the heady days of 2011, when gold hit over $1,900 an ounce.

What made things even more difficult for the sector in 2015 was the price volatility. Just when it appeared prices might be on a firm trajectory upward, they would then fall, creating more uncertainty among everyone from investors to gold companies.

That volatility is making it harder for prognosticators to estimate 2016 prices with any certainty. It’s the proverbial attempt to nail Jell-O to a wall.

That doesn’t prevent them from trying. But the resounding lack of consensus suggests it is a fraught exercise. Some are breathlessly proclaiming we’re on the brink of a new gold bull market. On the flip side, Goldman Sachs and JP Morgan predict it will fall to the psychologically important $1,000 US-per-ounce level — or lower — in 2016. Bank of America Merrill Lynch believes it will average $950 an ounce in early 2016 before recovering. Slightly more optimistic forecasters, like HSBC, predict gold will average $1,205 next year.

Gold is different from other metals in that its prices are not driven largely by typical supply and demand. While the prices of other metals, like copper or silver, tend to rise and fall as economies grow and shrink, a lot of different forces affect gold’s price. It’s used as a store of wealth, unlike most other metals (you don’t store copper to get rich), and it’s considered a “safe haven” — used as a hedge against political and economic uncertainty.

Inflation and the U.S. dollar are two major forces behind gold’s prices. In 2015, they didn’t work in gold’s favour. The collapse of the price of oil has kept inflation in check, which is bad for gold because of its role as a hedge against rising prices. The U.S. dollar has been strong — another blow for gold, which performs contrary to the greenback. Some say one of the reasons for the strong dollar was ongoing speculation that the U.S. Federal Reserve would raise rates for the first time in almost a decade. The Fed did that on Dec. 16, but there was minimal impact on gold due to the central bank’s dovish approach of a gradual tightening of future rates.

In September, Robert Quartermain did something highly unusual for a mining executive — he signed a streaming deal with an early exit strategy.

Precious metal streaming companies looking to team up to tackle bigger deals

Valerian Mazataud/Bloomberg

Overwhelmed by the sheer volume of opportunities available in volatile commodity markets, precious-metal “streaming” companies are looking to team up to take on large acquisitions that they might not be able to readily afford on their own.

Continue reading.
Quartermain, the CEO of Vancouver-based Pretium Resources Inc., was alarmed at how much value miners are giving away in gold and silver stream sales, in which future output is sold at below-market prices in exchange for an instant cash infusion.

So when he sold a US$150-million stream on Pretium’s Brucejack project in British Columbia, he insisted that the deal include buyback options for Pretium in 2018 and 2019, and that it cap the number of gold and silver ounces that can be sold.

“When you start putting in higher levels of streaming, and the stream lasts forever, then the potential upside starts going to streaming holders and (away from) your existing shareholders,” Quartermain said in an interview.

This will go down as the biggest year ever for metal streaming deals, and it’s not even close. Miners have raised US$4.2 billion from 11 stream sales in 2015, according to Financial Post data. That is nearly double the US$2.2 billion raised in 2013, which is the second biggest year on record.

For the most part, mining analysts and investors have cheered these deals. But their sheer number has caused alarm for some observers, who worry that miners are giving away vast amounts of future upside once metal prices improve.

The metal streaming business was created back in 2004. In these transactions, a streaming company like Silver Wheaton Corp. gives a mining company an upfront cash payment. In return, it gets the right to buy a fixed amount of precious metals production from the miner at a fixed price that is far below the market price. The streamer can then sell the metal for a profit. The biggest players in this business are Silver Wheaton, Franco-Nevada Corp. and Royal Gold Inc.

This past year was one of the worst ever for large mining companies, which suffered because of falling commodity prices and high leverage. They needed cash badly, and the streaming companies were more than happy to provide it. Mining giants such as Barrick Gold Corp., Glencore Plc, Teck Resources Ltd. and Vale SA all sold streams in 2015.On the surface, these deals made a lot of sense for mining companies. Their stock prices are so depressed that they do not want to even think about issuing equity. And the last thing this sector needs is to take on more debt. So they sold future metal production instead.

“When companies are between a rock and a hard place, they often sell what’s good because they can’t sell what’s bad,” said John Tumazos, an independent analyst.

The problem is that streams destroy much of the future “option value” for mining companies. Since the streaming metal is typically sold at fixed prices far below the market price, the streamers get all the benefit when market prices go up.

To take an extreme example, Silver Wheaton was buying silver from some mining companies at less than US$4 a pound in 2011, when silver prices rose to almost US$50. It was a massive transfer of wealth from mining companies to a streaming company.

Another concern is that streams can eliminate the exploration upside from a mine. If a miner has agreed to sell a fixed percentage of gold or silver production from a mine to a streamer, it will have to sell more metal if it makes a new discovery on the property and boosts production.

When companies are between a rock and a hard place, they often sell what’s good because they can’t sell what’s bad
John Ing, president and gold analyst at Maison Placements Canada, said streaming is reminiscent of hedging, in which metal is sold in fixed-price contracts. Hedging was all the rage in the gold industry in the 1990s, when prices were low. But it became a massive liability once prices rose far above the value in the contracts. Barrick had to spend more than $5 billion to unwind its hedge book in 2009.

Eventually, hedging became a toxic word in the industry. It is almost nonexistent today.

“It wasn’t until the price of gold went up that everybody realized what Barrick was leaving on the table,” Ing said.

“The same thing is going to happen (to streaming) when the price of gold goes up again. Not until then will people focus on the dark side of the streams.”

For investors that don’t like streaming, the good news is that miners are starting to preserve more upside for themselves in these transactions.

For example, Barrick struck a US$610-million stream sale with Royal Gold last August that guarantees higher sale prices down the road. For the first 550,000 gold ounces and 23.1 million silver ounces that Barrick delivers to Royal Gold, it receives 30 per cent of the prevailing spot prices. For every ounce after that, it receives 60 per cent of the spot prices. So if silver prices go up, Barrick stands to benefit.
Pretium Resources Inc.

Pretium’s Brucejack project in British Columbia.
Pretium went even further by negotiating optional buybacks of its stream and capping the total amount of gold and silver to be sold. If Pretium discovers more metal at the Brucejack project, it won’t go into the stream.

Traditional streaming companies like Silver Wheaton and Royal Gold are looking to buy streams that will last for decades, so Pretium’s deal is not for them. Instead, Pretium sold the stream to two private equity firms, Orion Resource Partners and Blackstone Group.

These companies are just looking for a good return and are not bothered by the idea of having their stream re-purchased in a few years. That is a relatively new concept in streaming, and it could be a game-changer if more private equity firms and other players decide to compete with traditional streamers.

Quartermain said his deal is proof that miners have alternatives to conventional streaming. He hopes other companies will follow Pretium’s lead and try to maintain some upside in these deals.

“We’ve shown you can, even in challenging markets, finance good projects and achieve that upside for shareholders,” he said.

Industry analysts predict further drops in the run-up to next month’s meeting of the Federal Reserve

Half of Gold Output May Not Be ‘Viable’ as Price Sags: Randgold

UPDATE FRIDAY

Gold

INDEX

UNITS

PRICE

CHANGE

%CHANGE

CONTRACT

TIME ET

2 DAY

GC1:COM

Gold (Comex)

USD/t oz.

1,056.40

-13.30

-1.24%

FEB 16

11:20:11

JG1:COM

Gold (Tokyo)

JPY/g

4,148.00

Gold prices fell yesterday in response to the dollar’s bounce after healthy US economic data raised expectations of an interest rate rise next month.

Prices hovered just above their lowest level in nearly six years, as spot gold fell 0.4 per cent to $1,070.46 an ounce, perilously close to the near-six-year low of $1,064.95 it hit last week.

The latest drop came after it was announced that manufacturing output rose well above economists’ expectations last month. A gauge of business investment plans in America also painted an optimistic picture.

“The orders number is surprisingly positive and that’s what’s weighing on the market,” Rob Haworth, the senior investment strategist for US Bank Wealth Management in Seattle, told Reuters.

Gold has been put under pressure by increasing speculation that the Federal Reserve will raise US rates next month for the first time in nearly a decade. Such a move would increase the cost of holding non-yielding bullion, having a knock-on effect on prices.

But Commerzbank analyst Daniel Briesemann said geo-political issues had played a part and predicted further falls for the precious metal. “The Turkey-Russia tension has only had a limited impact and now gold is back on its downward trend mainly due to the dollar and rate hike expectations,” he said.

“Uncertainty before the next Fed meeting will remain high and prices could head even lower in the next couple of weeks.”

Having fallen as low as $1,062 an ounce during trading last Wednesday, gold rallied on Thursday and was at one point a few dollars above $1,080. But after a dip back to below this level on Friday, the precious metal dropped again to below $1,070 in Asia overnight, where it remains rooted this morning.

Gold has fallen for 13 consecutive trading days out of 16 in Asia, while for each of the last five weeks in both London and New York it has closed lower than it started. The precious metal’s short-lived recovery last week now appears to be little more than a relief rally in a bear market.

The latest fall follows comments on Saturday from San Francisco Federal Reserve chief John Williams, who the Wall Street Journal reckons is a good barometer of wider monetary policy opinion. Williams says that if nothing happens to derail current economic trends, “there’s a strong case to be made in December to raise rates”.

Rate rises hurt gold and other non-yielding commodities relative to income-generating assets. More importantly, Williams’s statement has boosted the dollar – against which gold is typically held as a hedge – to a seven-month high.

Where is the gold price likely to go from here? OCBC Bank analyst Barnabas Gan has told Reuters that the current price ­– in fact any price around $1,080 – indicates that investors are “sitting on the fence as they await the [Fed] meeting in December”. As a result, he believes the downward trend in the price of gold is likely to persist over the next couple of weeks.

Almost all traders appear to be united in their view that the gold price will fall further if the Fed does decide to raise rates in the forthcoming weeks. Even Jason Hamlin, a self-designated “gold stock bull” who reckons that gold is currently “oversold”, writes on Seeking Alpha, the financial website, that the recent price drop is a sign that the metal “will test $1,000 in the near future”.

Hamlin says that if support for gold holds up in the event that the Fed decides to keep rates as they are – or makes it clear that the rates rise is a “one and done” increase (i.e. a modest rise that will be the last for some time) – then it is not unthinkable that a rally could push gold towards a substantially higher price of $1,200 an ounce.

Rangold Update

The more we continue to produce unprofitable gold, the more pressure we put on the gold price,” said Randgold Resources Ltd. Chief Executive Officer Mark Bristow. “In the medium term, it’s a very bullish outlook for the gold industry. The question is, how long are we going to supply it with unprofitable gold?”

Gold fell to a five-year low on Friday as a rising dollar and speculation that U.S. policy makers will boost interest rates next month curbed the appeal of bullion as a store of value. While industrial metal producers have promised output cuts, “we don’t have that psyche in the gold industry, we just send it off our mine and somebody buys it,” Bristow said in an interview in Toronto.

Gold miners buffeted by the drop in prices are shortening the life of mines by focusing only on the best quality ore, a practice known as high grading, which will restrict future output and support higher prices, according to Bristow. He said in a presentation to bankers in Toronto that the industry life span is down to about five years because companies have been aggressively high grading at the expense of future production.

“The industry has moved away from looking at optimal life of mines because everyone is trying to demonstrate short-term delivery,” he said. “Where is all this value that people promised in the gold industry? It’s not there.”

Traditionally, the industry would address this through “survival consolidation and mergers,” Bristow said.

He said earlier this month that Randgold continues to look for projects to buy, but has been frustrated by companies excessively pricing assets.

London-listed Randgold’s 10-year annualized return of 19 percent is the best performance among major producers tracked by Bloomberg.

Gold futures for February delivery declined 1.2 percent to $1,056.60 at 10:12 a.m. on the Comex in New York. Earlier, the price fell to $1,051.60 an ounce, the lowest since February 2010.

Hedge funds are betting gold’s decline is far from over, as the metal’s month-long slide deepened on expectations for higher U.S. interest rates.

Prices are trapped in their worst rout since July as Federal Reserve officials talk up improvements for the U.S. economy and reinforce signs that they’re ready to raise borrowing costs for the first time since 2006. That prospect has sent investors fleeing. Assets in exchange-traded products backed by gold have fallen to the lowest since 2009. Money managers are holding a net-short position in the metal for first time since August as their long wagers shrunk to the smallest in seven years.

The bears are being rewarded after futures last week dropped to a five-year low. The outlook for increasing borrowing costs poses a few hurdles for gold. Because the metal doesn’t pay interest, it loses out to competing assets, such as bonds. At the same time, higher rates usually favor a stronger dollar and cut demand for alternatives, while a strengthening economy means investors are less interested in bullion as a haven. More than $6.5 billion was wiped from the value of gold ETPs since mid-October.

“Gold is dead in the water and is an asset class that should be avoided,” said Chad Morganlander, a Florham Park, New Jersey-based money manager at Stifel, Nicolaus & Co., which oversees about $170 billion. “We continue to believe that dollar strength will be an anchor on metals, and in particular on gold.”

Fund Wagers

Futures have dropped 9.1 percent in 2015 to $1,076.30 an ounce on the Comex in New York. Prices fell for five straight weeks, the longest slide since July 24. The net-short position in gold futures and options was 8,989 contracts in the week ended Nov. 17, U.S. Commodity Futures Trading Commission data released three days later show. That compares with a net-bullish position of 21,530 contracts a week earlier. Investors trimmed their long holdings to 92,318, the smallest since December 2008.

Bullion, long considered a haven during times of geopolitical turmoil, failed to sustain brief gains last week following the Nov. 13 terrorist attacks in Paris that left 129 people dead and injured another 352. In addition to being ignored by investors, the metal is suffering from weak physical demand, particularly in India, which vies with China as the world’s top bullion buyer. Valcambi, one of Switzerland’s largest gold refiners, projects annual Indian imports of 850 metric tons. That’s down from the average 875 tons in the past five years.

“Investors have become somewhat inured with terrorism,” Jack Ablin, chief investment officer in Chicago for BMO Private Bank, which oversees $68 billion, said by telephone. “They just see it as an ongoing risk, but a single event is not enough to derail an economy or a market, so investors have chosen to ignore it.”

Gold is heading for a third straight annual loss amid speculation that the Fed will soon start tightening monetary policy.Minutes from the Fed’s October meeting released last week showed officials stressed that “it may well become appropriate” to raise the benchmark lending rate in December. Goldman Sachs Group Inc. analysts led by Jeffrey Currie said they expect bullion to extend losses over the next 12 months, according to a report on Nov. 18.

Paulson Stake

The slump hasn’t deterred billionaire hedge fund manager John Paulson. His firm, Paulson & Co., left its holding in the SPDR Gold Trust, the world’s biggest bullion ETP, unchanged in the third quarter, a government filing showed Nov. 16.

While traders are pricing in a more than two-thirds chance of a rate increase in December, the Fed minutes showed policy makers largely agree that the pace of increases will be gradual. The rate outlook may already be “absorbed by the market for now,” Karvy Commodities Broking said in a report Friday.

“The Fed has made it clear they are likely to hike in December — they’ve also telegraphed that they are going to move very slowly from thereafter, so there’s a little less enthusiasm for the dollar,” said Dan Heckman, national investment consultant in Kansas City, Missouri, at U.S. Bank Wealth Management, which oversees about $126 billion. Still, “we have a very low inflation and a very low-growth environment, and it’s hard to make a case for gold.”

BHP Billiton
The gigantic diamond, found in Botswana, is so big that Vancouver-based Lucara could not do a proper analysis, because the stone won’t fit in its scanning machine. Continue reading.
Since gold began a more than 40 per cent plunge from a 2011 peak, the miner’s gross margins have narrowed by just 1.9 per cent thanks to expansions and a strengthening U.S. dollar. For every dollar of gold Agnico Eagle sold last quarter, 49 US cents was gross profit, little changed from four years ago when gold touched US$1,900. That’s the best performance among 15 major producers tracked by Bloomberg, whose margins compressed by an average 64 per cent.

“We’ve generated net free cash flow this year because of those margins, and it’s not at the expense of squeezing our key development projects or our exploration budgets,” Chief Executive Officer Sean Boyd said in an interview in Toronto. “And we still managed to reduce our net debt by almost US$200 million.”

It hasn’t always been that way. The Toronto-based company struggled to bring five mines on stream between 2008 and 2010, missing production and cost guidance. In 2011, it suspended mining at Goldex in Quebec because of flooding and rock instability.

But in 2012, the company turned a corner. Since then, operational and exploration success coupled with acquisitions have helped turn things around, according to Josh Wolfson, an analyst with Dundee Capital Markets, who has a buy recommendation on the stock and a share price target of $44. In 2014, it joined with Yamana Gold Inc. to buy Osisko Mining Corp., giving it the Canadian Malartic gold mine in Northern Quebec.

Production Surges

The stock has gained 21 per cent this year in Toronto, the most among members of the BI Global Senior Gold Valuation Peers Index, which is down 30 per cent. Partly as a result, it’s the most expensive member at 66 times estimated earnings. Agnico Eagle closed up 5.2 per cent to $35.10 on Wednesday for a market value of $7.6 billion (US$5.7 billion).
“This was not a pretty story a couple of years ago,” Wolfson said by telephone. “They’ve been not only coping with the current environment, they’ve also been improving the business.”

A surge in production has supported margins through the gold downturn. On October 28, the company raised its 2015 gold production guidance to 1.65 million ounces from 1.6 million.

Related
Gold price sinks to fresh five-year low
Investors zero in on costs again as gold miners set to report Q3 results
For many miners, there’s no avoiding the gold ‘production cliff’ now
Currency Supports

It’s also benefited from currency weakness in all three countries in which it operates: Canada, Finland and Mexico. In the third quarter, the Canadian dollar, euro and Mexican peso were eight, four and 23 per cent lower, respectively, than the company’s 2015 assumptions, it said in its third-quarter earnings statement.

The combination of higher production and currency gains lowered third-quarter total cash costs per ounce on a by-product basis to US$536 from US$716 a year earlier. Reduced costs, combined with lower capital expenditure and general and administrative costs, knocked Agnico Eagle’s all-in-sustaining costs down to US$759 from US$1,059, the company said. Weaker currencies were responsible for US$39 an ounce of the latter reduction, the company said in an e-mail.

They’ve been not only coping with the current environment, they’ve also been improving the business
Agnico Eagle also managed to keep its investment grade rating, even through last year’s purchase of Osisko, and benefits from a high average reserve grade, Boyd said. The average reserve grade of its portfolio is 2.4 grams per tonne compared to an industry average of 1.2 grams. In 2014, the company ran a test on their reserve numbers assuming $1,000 gold and found they dropped only six percent, he said.

Portfolio Strength

Potential risks for the company are “quite negligible,” with the only real worry being some sort of black swan event at an existing mine, according to Michael Siperco, an analyst with Macquarie Capital Markets Canada Ltd. He cited the 2011 Goldex shutdown as an example, but added that Agnico Eagle’s portfolio is much stronger now.

“There isn’t one big development project that they’re trying to get done, there isn’t a massive need for new capital,” he said by telephone.

Of the 25 analysts covering the stock, 20 have the equivalent of a buy rating, three recommend holding and two say sell, according to data compiled by Bloomberg.

The company had total net debt of US$1.2 billion at the end of the third quarter, consisting of US$850 million of fixed rate debt and US$350 million drawn on its variable rate revolving line of credit.

Cost Cuts

Given low gold prices, the company’s debt is still a concern, although “they’re in a much better position then their peers,” Wolfson said.

CEO Boyd sees more room to cut costs while still boosting production. The company’s focus now is on containing debt and developing existing assets.

“Five years from now we could be producing 30 per cent more gold,” he said. “We have the projects. The question will be, in this environment, the pace at which we move towards that expanded output level.”

Gold investors have more to worry about than the prospect of higher U.S. interest rates.

The metal, traditionally used as a hedge against rising consumer prices, is getting a one-two punch as weak inflation indicators compound the impact of speculation that the Federal Reserve will soon tighten monetary policy. Higher rates curb gold’s appeal because it doesn’t pay interest or give dividends, unlike competing assets.

Americans’ expectations for inflation over the next five-to-ten years matched the lowest in data going back to 1979, according to a University of Michigan report on Friday. While government figures on Tuesday showed prices excluding food and energy picked up in October, the central bank’s preferred gauge hasn’t met the Fed’s 2 percent goal since April 2012.

Demand withers for gold as a store of value

“There is no inflation, and that means gold will remain depressed, and I’m looking for lower gold going into next year,” Miguel Perez-Santalla, the sales and marketing manager at Heraeus Metals in New York, said in a telephone interview. “Nobody feels the need to have gold.”

Policy makers have said a December increase is possible as the labor market improves. Bets on a move in December accelerated this month after government data on Nov. 6 showed a drop in the unemployment rate and a jump in average hourly earnings.

A report from the Labor Department on Tuesday showed the cost of living excluding food and energy rose 0.2 percent for a second straight month in October, matching the median forecast in a Bloomberg survey of economists.

Mining shares including Glencore Plc led a slump in European equities as metals prices tumbled on fears that an economic slowdown in China, the world’s biggest consumer of raw materials, is deepening.

Glencore fell as much as 10 percent to a record 107 pence in London trading. Anglo American Plc, Antofagasta Plc and ArcelorMittal dropped more than 6 percent, dragging the regional benchmark Stoxx Europe 600 Index lower. KAZ Minerals Plc plunged almost 18 percent, the most since January, to a record low.

“Until China demand and emerging-market currencies find a floor, it will remain challenging to put an absolute floor on commodity prices,” Credit Suisse Group AG analysts led by Liam Fitzpatrick wrote in a note Tuesday.

The bank cut its price estimates for large diversified miners including Glencore and BHP Billiton Ltd., which said on Tuesday it’s planning to sell hybrid securities to help refinance near-term liabilities. Stainless steel producer Outokumpu Oyj sank as much as 16 percent after saying third-quarter delivery volumes may be 10 percent lower than the previous quarter.

Growth Cut

The Asian Development Bank reduced its growth forecasts for China and said the country’s declining appetite for energy, metals and other raw materials would hurt commodity-focused export economies like Mongolia and Indonesia. China is set to grow at its slowest pace in a quarter century this year even after five central bank interest-rate cuts and fiscal stimulus.

Copper declined 2.5 percent to $5,139 a metric ton. Zinc sank as much as 1.8 percent to $1,628 a ton, the lowest in five years. European coal for 2016 dropped below $50 a ton for the first time.

Glencore, which sells all three commodities, was down 8.7 percent at 108.60 pence by 11:02 a.m. in London trading, after earlier touching the lowest since it began trading in May 2011.

“Glencore is a bet on copper, and weakness in metal prices is sending tremors through Glencore’s shareholders,” said Richard Knights, a mining analyst at Liberum Capital in London.

Media sources are reporting that a military junta has taken power in Burkina Faso following the arrest of interim President and Prime Minister. The transitional government has also been disbanded, only four weeks before elections (planned for October 11). The military guard that is leading the coup is the RSP (Régiment de sécurité présidentielle), loyal to the ousted leader Compaore who has fled to Ivory Coast almost a year ago.

Demands from the RSP have not yet been tabled. While there have been no reported impacts to mining operations, companies with exposure to Burkina Faso are likely to face headwinds in the near term. Among producing companies IAMGOLD and Endeavour Mining have the largest exposure to Burkina Faso at 45% and 32% of NAV, respectively.

The Canaccord Genuity Metals & Mining Team notes that for IAMGOLD, approximately 45% of NAV and 43% of YTD gold production is sourced from Burkina Faso and is its lowest cost owner-operated asset. Endeavour Mining is less exposed at 32% of NAV; however, only 13% of 2015’s estimated gold production is sourced from the country. In the Team’s opinion, Hounde is already heavily discounted by the market and a positive construction decision is unlikely in the current market environment. The bigger impact would be Youga which is in production but only 1% of NAV.

Endeavour has a solid operating base in Mali, Ghana, and Ivory Coast, and we believe that the coup should have minimal impact to the company in the near term. Streaming companies Franco-Nevada and Sandstorm Gold both have streams on True Gold’s Karma project in Burkina Faso; however, company-wide exposure for the streamers remains small. For Franco-Nevada, Karma represents 1.7% of NAV.

In Sandstorm’s valuation, Karma represents approximately 6% of NAV; however, this would decline to 4% if you net out the money that still needs to be paid to True Gold. If anything, this perfectly showcases what royalty/streaming companies are all about – a defense against government coups and instability and the general risk. Development companies Roxgold and Orezone have 100% exposure and may see development delays depending on how the coup impacts logistics and workers in the country (via general strikes, for instance).